Defence - Major capital facilities projects1

Major capital facilities projects

David
Watt

The 2010–11 Budget contains $1.7 billion in funding for
Capital Facilities Projects—the building, upgrading and
maintenance of Defence facilities. The Defence Portfolio Budget
Statements 2010–11 (PBS) contain extensive data about
works falling within this area. In particular,
Table 28 of the PBS lists all of the major and medium capital
works by state and federal electorate.[1]

Major Capital Facilities projects involving expenditure over $15
million require Government approval and are reviewed by the
Parliamentary Standing Committee on Public Works. Medium facilities
projects have an expenditure of between $250 000 and $15
million.

One of the major criteria by which funding is allocated is that
facility upgrades should support the Approved Capital Major
Investment Program (ACMIP). Examples of projects which appear to
fit this criterion include:

Taken together, these projects account for over $900 million of
the Capital facilities budget for 2010–11, and a not
insignificant amount of the rest will be spent on other works at
the same bases.

Both the 2009 Defence White Paper and the 2008 Audit of
the Defence Budget (Pappas Review) made much of the need
for Defence to consolidate its extensive estate holdings. The White
Paper puts this succinctly:

Defence should consolidate units into fewer,
larger and sustainable multi-user bases aimed at increasing the
alignment of functions at Joint and Service level and their
capacity to support operations...[2]

The White Paper also stated that Defence would rationalise its
storage and distribution network, reducing the number of sites from
24 to seven.[3]

The Government has been reluctant to move rapidly towards the
closure of bases. When the Minister for Defence released the public
version of the Pappas Review in November 2009 he announced that he
had instructed the Department to conduct a review of
Defence’s basing requirements. This would be:

A comprehensive departmental review, including
a strategic assessment of Defence's basing requirements and a
detailed financial analysis of long-term costs and efficiency gains
of different basing mixes, will develop options for changes to the
estate over a 25-30 year period. “It is envisaged that a
detailed study of this type will take 12-18 months to complete. An
independent commission will then be appointed to consider Defence's
recommendations. This commission will conduct substantial public
consultation before reporting back to the
Government,...”[4]

The Budget does not provide many clues about the
Government’s thinking on base closures. It is highly unlikely
that the larger (and growing) bases mentioned above will be closed
and it is also notable that Queensland and the Northern Territory
are to receive close to $680 million of the money allocated to
major and medium capital facilities projects. Given that, according
to the Pappas Review, Defence owns 350 properties and leases 350
more—albeit only 76 of these are bases with permanent
staff—there is certainly plenty of scope for the Government
to look at rationalisation.[5]

Moorebank

The Budget also provides $13.7 million in 2010–11 and
$21.5 million during 2011–12 to facilitate Defence moving the
School of Military Engineering from Steele Barracks at Moorebank to
the barracks at Holsworthy.[6] This is part of the Government’s strategy to
build a major intermodal transport terminal at Moorebank.

The Howard Government announced in 2004 the plan to build a road
and rail freight hub at Moorebank, and both the current Government
and the Opposition promised the development of the transport
terminal at the time of the 2007 election. Both the cost of the
removal of the School from Moorebank and its final location (the
initial announcement listed Puckapunyal as the new home) have been
under discussion for much of the intervening time.[7]

Moorebank remains the location of Defence’s National
Storage and Distribution Centre (NSDC) and the decision mentioned
in the White Paper to rationalise the network of distribution
centres has led to a decision to build a new ‘state of the
art’ centre there.[8] It should be noted that Defence has not actually owned
the land at Moorebank on which the NSDC is sited since 2003, having
sold it to Westpac Funds Management (reportedly for $185 million)
and then leased it back.[9]